Armstrong & Associates Employment Law Firm

Does your severance agreement comply with the over-40 rules?

If drafted properly, a severance agreement can benefit both employer and employee by allowing a smooth parting of the ways. 

However, if you are 40 years of age or older, your severance agreement must conform to strict government requirements in order to be enforceable. 

A severance agreement for older employees

A severance agreement in some way compensates a departing employee for leaving his or her position. The employer provides this compensation in return for the former employee’s agreement to abide by certain post-employment conduct limitations. An example is waiving the right to sue for certain reasons. 

The EEOC and plain language

The Equal Employment Opportunity Commission requires severance agreement language that is not “overly broad and misleading,” or the agreement will not be enforceable in court. The agreement cannot limit the ability of the departing employee to exercise his or her Title VII rights, such as cooperating in an investigation. 

For those over 40

If the departing employee is 40 years of age or older, a severance agreement must adhere to requirements established by the Age Discrimination in Employment Act as well as the Older Workers Benefit Protection Plan. According to ADEA and OWBP requirements, the older severance agreement recipient must have at least 21 days to consider the agreement. In addition, the agreement must contain clear, easy-to-understand language that avoids legalese and complex sentences. It must also contain a specific reference to the ADEA and a recommendation that the departing employee seek consultation with an attorney prior to signing. Following a legal review, the holder of the agreement can have the assurance that the document complies with the requirements for a departing employee over the age of 40. 


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